Iraq wants oil companies to cut spending next year

Iraq wants oil companies to cut spending next year

Posted, 9-30-15

Iraq wants oil companies to cut spending next yearAbdul Mahdy Al-Ameedi, the director of licensing for the Oil Ministry of Iraq, says that it asked oil companies to reduce their spending plans for 2016 by the end of September due to lower oil prices and government revenue. Al-Ameedi, however, said that the lower spending in 2016 must not affect oil production in 2015.

“We’ve asked them in a letter we sent them to take into consideration the drop in oil prices and the low revenues of the government that may not cover their investments,” said Al-Ameedi. “There was a stipulation that this investment reduction must not affect oil output from the fields that was in the 2015 schedule.”

Right now, Iraq is producing over 3 million barrels per day.

The country is currently experiencing an oil slump due to two reasons: Firstly, because of the lower oil prices in the global market and secondly, because of the militants who captured the oil-rich lands in the northwestern part of the country. Last month, Iraq’s oil revenue was down by 20% from July due to reduced shipments overseas. Militant robberies affected the supplies along the northern pipeline to Turkey, reducing oil production from 4.2 million a day to 4.13 million barrels. Iraq’s oil revenues were only at $3.87 billion in August.

Morgan Stanley changed their views on Iraq’s oil production. From forecasting a higher oil production in Iraq by 2020, the US-based financial institution predicted a slow decline beginning 2018.

Despite the decline of oil’s prices, job prospects in the industry for the locals in Iraq are looking up. Increased oil production means more work for employees, and even widens the demand for more workers. Oil and gas giant Unaoil, which focuses on equipment maintenance, has placed a huge emphasis on local employment, with over 75% Iraqi nationals currently working for the company.

Oil prices have continued to decline since the half-quarter of last year due to the fact that the Organization of Petroleum Exporting Countries (OPEC) defended market shares against a thriving production in the U.S.